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W R Berkley Corporation (NYSE:WRB): Does -2.07% Earnings Drop In A Year Reflect The Long-Term Trend?

Assessing W R Berkley Corporation’s (NYSE:WRB) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess WRB’s latest performance announced on 30 September 2017 and evaluate these figures to its historical trend and industry movements. See our latest analysis for W. R. Berkley

Was WRB’s recent earnings decline worse than the long-term trend and the industry?

To account for any quarterly or half-yearly updates, I use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This enables me to assess different stocks on a similar basis, using new information. For W. R. Berkley, its most recent earnings (trailing twelve month) is $547.3M, which, against last year’s level, has dropped by -2.07%. Since these figures are relatively myopic, I have estimated an annualized five-year value for W. R. Berkley’s net income, which stands at $520.5M. This suggests that although earnings declined from the previous year, over time, W. R. Berkley’s earnings have been rising on average.

NYSE:WRB Income Statement Jan 6th 18
NYSE:WRB Income Statement Jan 6th 18

What’s enabled this growth? Well, let’s take a look at if it is solely because of industry tailwinds, or if W. R. Berkley has experienced some company-specific growth. The hike in earnings seems to be supported by a substantial top-line increase overtaking its growth rate of expenses. Though this brought about a margin contraction, it has made W. R. Berkley more profitable. Scanning growth from a sector-level, the US insurance industry has been growing, albeit, at a subdued single-digit rate of 6.15% over the previous year, and 8.74% over the past five years. This shows that any uplift the industry is deriving benefit from, W. R. Berkley has not been able to leverage it as much as its industry peers.

What does this mean?

W. R. Berkley’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies are profitable, but have unpredictable earnings, can have many factors influencing its business. I suggest you continue to research W. R. Berkley to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for WRB’s future growth? Take a look at our free research report of analyst consensus for WRB’s outlook.

2. Financial Health: Is WRB’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.

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